News and our views

April 17, 2018

The Truth behind Credit Cards

Credit cards are a convenience, or at least that’s what we’ve been trained to think over the years by our friendly banks.   In return we get reward points which are often difficult to use and equate to a fraction of how much we have to pay to get the points.   Have you noticed how over time the value of your points is getting less, or how the banks are constantly reducing the effective number of points earned for each dollar you spend?  This is despite all the clever marketing to make us think otherwise.   

Here is a list of the obvious costs for operating a credit card:

  1. The merchant has to pay at least 1% on every dollar booked up on your card and in the case of Amex, Diners and PayPal the merchant will pay anything up to 3%.  Somehow the merchant has to pass this on either directly or indirectly otherwise they cease to exist.

  2. For those who don't pay the credit card out in full expect to pay anything up to 25% interest per annum.  Even missing a payment by a day can lead to 3 months interest and getting off this interest cycle can be difficult.


  3. If you are running your credit cards through your business it will lead to additional costs like accounting and bookkeeping.  Even if the cards are completely private it can take considerable time to sort out, even with the help of cloud based accounting packages.


  4. Credit cards can lead to delaying tax deductions and in some cases up to 12 months.


  5. They can lead to Fringe Benefits Tax if private expenses find their way into your business accounts.


  6. Long standing credit card debt and even by virtue of  having a credit limit will reduce your capacity to borrow for something sensible.  This usually happens at the most inconvenient time.


    Here are the benefits of a credit card

    Reward Points  - the rate of return is half a percent on master and visa, one percent on Amex and Diners and zero on PayPal. So to get a return airfare to Europe you will have to spend about $600,000 on Visa or Master or $ 300,000 on Amex or Diners.  At the same time you probably have to book 12 months in advance, fly via the North Poll and enjoy a 30 to 40 hour flight each way. That means more time off work and therefore less pay. Let's hope your points don't expire! (it has happened)


    Free credit - just make sure you don't get it wrong and fall behind because if you do that free credit turns into an even higher interest rate.


    They do offer convenience for paying for goods and quite good for record keeping purposes.


    Are there any alternatives?

    Yes. It is amazing that more people know what a credit card is than a debit card.  The concept of paying for goods where the cost goes directly to your nominated bank account rather than against money you don't have should not be news to anyone.  

    From an accounting perspective you can direct debit business expenses to your business account and private expenses to your private account instantly – Quite simple. 

    If you really want to use credit cards here are some tips:

  1. Never use them to pay for expenses if the merchant is going to add a fee unless you have no choice.

  2. Make sure the card is paid out in full by the due date.

    For businesses, keep private costs away from the business accounts.  Operating two cards is a preferred way to manage private costs.

In summary, if you feel a debit card is as convenient as a credit card, then get rid of your credit card.  If you want cheap flights, plan early, use a good travel agent and you would be surprised how much you can save.


December 10, 2017

Buying Cars in Companies or Trusts

One of the most frequently asked questions that we are asked is “should I salary sacrifice a car or in the case of business owners, should I be buying a car to save tax?”  The short answer is usually not, and if you cannot produce a proper log book to support the business use then beware.  Not only will you miss out on the tax deduction, you will actually end up paying tax.

Here are the facts

In the absence of a log book the ATO calculates the private use/ fringe benefit of a car at 20% of the value of the car inclusive of GST.  If for example you purchased a car for $ 40,000 incl GST, then the private/taxable component is deemed to be $ 8,000.  Now let’s look at the tax deductions:


Motor Vehicle Costs                                                                     Amount

Depreciation based on prime cost 12.5% of 36,363.64 (net of GST)  $4,545

Interest over 4 years with a 40% residual at 6% pa                        $1,680

Petrol for 15000km pa at 10ltr/100                                                $2,100

Registration                                                                                 $750

Insurance                                                                                    $750

Repairs                                                                                       $1,000

Total                                                                                              $10,825


So the net tax deduction is $ 10825 - $ 8000.00 = $ 2,825.

Most people are paying either 34.5% tax or 39% tax in which case the average tax benefit is between $975 and $ 1,102 per annum.   The problem is exaggerated if the car’s cost is over the depreciation cost limit of $57,581, then the tax deductions are capped at this level, but not the fringe benefit/private use.  You could easily end up in a tax payable position.

Keep in mind that an individual can claim a tax deduction based on the per kilometer method at 66 cents per kilometer up to 5000km p.a per car or $ 3,300 p.a, higher than the tax benefit outlined in the above example.  The same rate applies to all cars regardless of age.  You do however have to justify the kilometers were for legitimate business travel.

There are ways to minimise the tax impact and lessons to be learnt:

  1. Never assume buying a car in your company or trust name is the right way;

  2. Never buy a car for tax purposes only;

  3. Avoid buying new cars and consider near new or up to 2 years old;

  4. Don’t change cars unless you have to.  The opportunity cost of buying a car with finance is equivalent to servicing a $ 300,000 mortgage; and

  5. Always talk to us before you buy any car. 

If you have an existing car owned outright the running costs are only $ 4,600.00 which is the equivalent to servicing a $ 115,000 mortgage.  Therefore the opportunity cost of a new car is equivalent to servicing a $200,000 mortgage (approximate). 

Consider this:   Invested sensibly the same $ 200,000 will grow and its common for a good investment to double every 10 years, whereas a car’s worth over the same time would be negligible.  

The conclusion has to be, that unless you have a log book with a high business percentage and its current I.e. less than 5 years old and valid, then the tax benefits are likely not worth chasing.

The figures used above are by way of example only.  Please contact us for any further questions on 07 3256 0822.

October 09, 2017

Attention Qld Rail Employees

Did you know that JKA Accounting Solutions has a large Qld Rail following developed over the last 20 years?  In particular, we prepare tax returns for QLD Rail Stewards and Drivers who are entitled to certain travel deductions based on ATO set rulings? 

In order to claim the correct amounts you also need to understand how to interpret and correctly enter the income amounts on your tax return.  Call JKA Accounting Solutions today on  07 3256 0822 for an appointment for your 2017 tax return.  Our friendly staff will provide you with a list of information you are required to bring in to maximise your claims. 

July 02, 2017

Signs of a Property Downturn?

There is a lot of talk of late regarding a downturn in the Brisbane property market.  There are so called experts who claim that property is doing well with no signs of a downturn or negative sentiment.  I would argue that these people are often conflicted with what they say.  Here are some signs that could indicate the property market has heated up.

  1. A West End developer offering a brand new car for new residential units.

  2. Approx. 11 Brisbane developers gone into liquidation this calendar year.

  3. Government taking a stance on negative gearing.

  4. We Brisbane locals are blaming NSW & VIC for the property hype.  Did you know they are blaming us?

  5. Major banks not only rejecting loan approvals for investors, but also restricting lending to developers.

That’s not even considering economic signals like historically low wages growth, low inflation and interests rates.   I am not suggesting a crash, however these factors usually indicate low property growth.  This is where an astute investor may see opportunity at the right price.

So next time you need property advice give us a call on 07 3256 0822.

Peter Malanos CPA

Principal – JKA Accounting Solutions


June 14, 2017

JKA Winter Newsletter

Latest Tax Changes for Individuals and Small Business

June 14, 2017


Tax Planning Alert for Individuals who contribute to Superannuation

By: Peter Malanos CPA  -  Principal

Employees may need to review their salary sacrifice position from 1 July 2017 due to changes to the superannuation rules.

Changes from 1 July 2017

The changes from 1 July 2017 for salary sacrificed contributions into superannuation are that:

  • All employees’ concessional contribution cap will be $25,000 per annum, regardless of age.

  • The 10% maximum earnings conditions for an employee to claim personal superannuation contributions as a personal tax deduction will be removed.

    The effect of these changes are that instead of salary sacrificing take home pay into superannuation, an employee can instead make a personal superannuation contribution and claim a tax deduction


 What some employers may do

  • Subject to employment contracts or industrial awards, employers may wish to remove the operational risks of allowing salary sacrificing, because from 1 July 2017 employees can effectively do this themselves by making a personal superannuation contribution and claiming a tax deduction.  This will have the same tax effect as a traditional salary sacrifice arrangement.



  • Be ready for change and to re-organise your salary sacrifice arrangements.

  • Some people have life & TPD insurance paid to a third party superannuation fund. Most clients don’t realise that these premiums are technically personal superannuation contributions and can therefore be claimed as a tax deduction from 1 July, 2017.  Therefore, creating more incentive to retain life insurance policies for longer.   

Call us today to find out if your life insurance premiums are now deductible.

May 05, 2017

Tax Planning Tips for Salary and Wage Earners

Here are some tips to keep in mind as the end of financial year approaches.  As always feel free to contact our team if you have any questions.

September 19, 2016

Backflip on Super

It seems common sense has prevailed and the government has dumped the proposed $500,000 lifetime retrospective limit on contributions.  Let's hope that both sides of politics realise that taxing super is not the answer to fixing our nation's debt problems and leave superannuation laws alone for the foreseeable future.

August 03, 2016

Investment newsletter and market update

Great newsletter on the latest market news, federal budget changes and implications, and investment strategies.

August 03, 2016

Government defends $500,000 lifetime limit on super contributions

The government can keep on defending the $500,000 after tax contributions limit.  This proposed measure is in our view retrospective and one which discriminates against those who have contributed in the past, in good faith based on legislation at the time.

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